CALGARY — A big gain on the sale of its Esso gas stations last year swelled profits for Imperial Oil Ltd. (TSX:IMO), but operating performance at its newest oilsands mining project disappointed analysts.
The Calgary-based company posted a full-year 2016 profit of $2.2 billion and a fourth-quarter profit of $1.44 billion on Tuesday, both mainly due to the sale of 497 Esso retail stations to five fuel distributors for $2.8 billion in a deal announced last March.
But Imperial fell short of expectations for the last three months of 2016 on overall production which fell to 399,000 barrels of oil equivalent per day from 400,000 boe/d in the same period of 2015.
Its reported output averaged just 120,000 barrels per day at its Kearl oilsands mine in northern Alberta in the fourth quarter versus 144,000 bpd in the last three months of 2015.
The Kearl project, 29 per cent owned by Imperial’s American parent ExxonMobil, has capacity of 220,000 bpd. Its 110,000-bpd first phase has been producing bitumen since spring 2013 and first oil at its expansion project was achieved in mid-2015.
In a news release, Imperial blamed the Kearl results on “planned and unplanned maintenance activities,” without giving detail.
Spokeswoman Killeen Kelly said in an email the maintenance was designed “to optimize operations” at Kearl but didn’t provide detail either or answer whether production continues to be impaired.
“We have reservations about Kearl continuously achieving run-rate capacity of about 220,000 bpd in 2017 and believe further small-scale investment may be required to consistently achieve capacity,” wrote CIBC analyst Arthur Grayfer in a note to investors.
The drop in Kearl production was offset by better-than-expected results from the 40-year-old Syncrude oilsands mining project, which matched its best-ever quarterly performance with near-nameplate production of 350,000 bpd versus about 255,000 bpd in the year-earlier period.
Imperial, which operates Syncrude, earned 87,000 bpd from its 25 per cent stake, up from 64,000 bpd a year ago.
Analysts said the results bode well for Suncor Energy Inc. (TSX:SU), which owns about 54 per cent of Syncrude and reports 2016 results next week.